Remarks by Deputy Prime Minister, Coordinating Minister for Economic Policies, Minister for Finance and Chairman of Future Economy Council Heng Swee Keat at the Future Economy Council (FEC) meeting on 30 April 2021.
Since the launch of the Industry Transformation Maps in 2016, our economic transformation efforts have achieved good results.
From 2016 to 2019, Singapore’s overall labour productivity grew by 2.7% per year, up from 2.2% per year in the preceding three years. Over the same period, real median income of Singaporeans improved, growing by 3.7% per year, higher than the 3.2% per year growth in the prior three years. Businesses have also responded positively to our call for transformation. Many have started their transformation journeys, to build new capabilities, and create better jobs for their workers. Workers are making effort to learn new skills. The ITMs embody how tripartism works in Singapore. By working together, we can achieve more for our businesses and our workers, and create a more vibrant and competitive economy.
The COVID-19 pandemic, which started last year, has plunged the world into the crisis of a generation. Last year, our economy shrank by 5.4%, our worst recession since independence. To support our workers, businesses, and households, we committed close to S$100 billion in support measures. Based on the interim analysis by the Ministry of Finance, without these measures, our GDP contraction would have doubled. And an additional 155,000 jobs would not have been saved or created.
Even as we were dealing with the crisis last year, we were also focusing on the structural shifts in the global economy, and exploring how all of us can emerge stronger from this crisis. COVID-19 has accelerated structural shifts, such as the digital revolution, and enhanced the focus on environmental sustainability and resilience. The pace and impact of global disruptions triggered by the pandemic are unprecedented and much more than by the Global Financial Crisis. The post-COVID-19 world will therefore be very different, and we must re-double our efforts to prepare our workers and businesses for this future.
We start the new term of the Future Economy Council at this very critical juncture. We have a head-start, as we started our ITM effort five years ago. Many companies have also managed to weather the crisis, preserving capabilities and retaining skilled workers. On the back on our strong tripartite foundation, we are building for the future from a position of strength.
We held the first FEC meeting of the new term today. I thank our outgoing FEC members for their valuable contributions and leadership, and look forward to their continued support as we navigate the complex challenges ahead. We also welcome new members, who bring with them fresh perspectives and new ideas to drive the next phase of our economic transformation.
The FEC’s focus in the coming year is on ITM 2025. We will be building on the momentum in the last five years, to refresh each of the 23 ITMs for the next five years, and develop new strategies to address the accelerated structural shifts resulting from COVID-19.
What are the key priorities for this next phase? ITM 2025 will be strengthened by three thrusts.
First, we will integrate our economic transformation efforts more closely with research and innovation. Innovation is critical to our economic transformation, and will be even more so in a post-pandemic world. To achieve greater synergies, ITM 2025 will be closely integrated with our Research, Innovation and Enterprise 2025 plans, where we will be investing S$25 billion over the next five years. We have re-organised our FEC work into 7 clusters, aligned with the four RIE domains, namely – Manufacturing, Trade & Connectivity; Human Health & Potential; Urban Solutions & Sustainability; and Smart Nation & Digital Economy. This way, our investments in R&D can better address national priorities, and the needs of our businesses and people. We can also better translate the results of our R&D into business solutions and products. Each cluster will oversee the development and implementation of the respective ITMs. Besides updating each ITM, clustering ITMs that are closely related, and better linking each ITM to research and innovation, we are also exploring new synergies, and developing new areas of growth arising from the structural shifts.
Second, ITM 2025 will incorporate the recommendations of the Emerging Stronger Taskforce, or EST. I set up the EST in May last year to assess the impact of COVID-19 on Singapore’s economy, and identify ways for Singapore to stay resilient and build new sources of dynamism. At today’s FEC meeting, the EST presented its recommendations on how Singapore can ride on the digital revolution, and the pursuit of greater sustainability and inclusive growth in a post-pandemic world. The EST also shared its experience in piloting a new approach to public-private partnerships through the Alliances for Action, or AfAs. The AfA is a new and more nimble way to collaborate, with a strong bias towards action. The EST started 9 AfAs. What the AfAs have done across various sectors, in a short amount of time, is very promising. So we are looking at how this new way of partnership can be an integral part of our ITM efforts. The EST will share more details in the coming weeks.
Third, ITM 2025 will have a greater focus on jobs and skills, to enable our people to reach their fullest potential. I have emphasised this before – we are undertaking the transformation of our economy to enable our workers to have good jobs, and more opportunities to grow. As technology advances and our companies build new capabilities, jobs will be reshaped in significant ways. Jobs will need to be re-designed, and our workers will need to learn new skills. Workers who are more skilled can contribute more to their companies – the fortunes of our workers and our companies are therefore deeply intertwined. We will need to enable our workers to learn the right skills to work more effectively with technology. And as the economy transforms, we must help displaced workers move to other good jobs, and enable our senior workers to continue working if they wish to. We should build on the strengths of our people. They have a strong foundation in their school years and can look forward to the Next Bound of SkillsFuture. Our tripartite partners are playing a critical part. The Labour Movement is partnering businesses to help workers upgrade while supporting company transformation through the Company Training Committees. They also established the Job Security Council to help workers retain their jobs or move into new roles. The Singapore National Employers Federation or SNEF has brought together the leaders of companies to work with each other, and with the Labour Movement, to develop the capabilities of workers.
Let me conclude. The global economy in the coming years will be filled with greater uncertainty and complexity. The next phase of Singapore’s economic journey will be more challenging. As we embark on ITM2025, we must build on the progress made in the last five years, and continue to adapt and evolve our approach. The Future Economy Council will develop new strategies for the coming years and oversee our ITM 2025 efforts. As we start a new FEC term, let us commit to working together, so as to create a growing and vibrant economy; and better jobs and prospects for all Singaporeans.
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